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The Corporate Governance Role of the Media: Evidence from Russia


I. J. Alexander Dyck


University of Toronto - Rotman School of Management

Natalya Volchkova


New Economic School (NES); Center for Economic and Financial Research (CEFIR)

Luigi Zingales


University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR); University of Chicago - Polsky Center for Entrepreneurship; European Corporate Governance Institute (ECGI)

September 2006

NBER Working Paper No. w12525

Abstract:     
We study the effect of media coverage on corporate governance by focusing on Russia in the period 1999-2002. This setting offers us three ideal conditions for such a study: plenty of corporate governance violations, no alternative mechanisms to address them, and the presence of an investment fund (the Hermitage) that actively lobbies the international press to shame companies perpetrating those violations. We find that Hermitageâ€TMs lobbying is effective in increasing the coverage of corporate governance violations in the Anglo-American press. We also find that coverage in the Anglo-American press increases the probability that a corporate governance violation is reversed. This effect is present even when we instrument coverage with an exogenous determinant, i.e. the Hermitageâ€TMs portfolio composition at the beginning of the period. The Hermitageâ€TMs strategy seems to work in part by impacting Russian companiesâ€TM reputation abroad and in part by forcing regulators into action.

Number of Pages in PDF File: 75

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Date posted: September 25, 2006  

Suggested Citation

Dyck, I. J. Alexander and Volchkova, Natalya and Zingales, Luigi, The Corporate Governance Role of the Media: Evidence from Russia (September 2006). NBER Working Paper No. w12525. Available at SSRN: http://ssrn.com/abstract=931610

Contact Information

I.J. Alexander Dyck
University of Toronto - Rotman School of Management ( email )
105 St. George Street
Toronto, Ontario M5S 3E6
Canada
416-946-0819 (Phone)
Natalya Volchkova
New Economic School (NES)
47 Nakhimovsky Prospekt
Moscow
Russia
Center for Economic and Financial Research (CEFIR) ( email )
47 Nakhimovsky Prospect, Office #720
117418 Moscow
Russia
+7-095-332 4083 (Phone)
Luigi Zingales (Contact Author)
University of Chicago - Booth School of Business ( email )
5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
773-702-3196 (Phone)
773-834-2081 (Fax)

Chicago Booth School of Business Logo

National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Centre for Economic Policy Research (CEPR)
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
University of Chicago - Polsky Center for Entrepreneurship
Chicago, IL 60637
United States
European Corporate Governance Institute (ECGI)
c/o ECARES ULB CP 114
B-1050 Brussels
Belgium
HOME PAGE: http://www.ecgi.org
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